Yugoslavs face a tight squeeze under IMF austerity program

By
Eric Bourne, Special to The Christian Science Monitor /
August 29, 1984

Belgrade

Some 2 to 3 million Yugoslavs could find big holes in their pockets under a new program that penalizes money-losing enterprises - part of the economic austerity plan this nation will face for at least two years.

Austerity is a condition for standby credit to Yugoslavia from the International Monetary Fund and for contingent support from Western governments and banks. Under the new law, enterprises that run in the red may pay workers only the guaranteed minimum wage, which is about two-thirds of the present average pay for workers.

The austerity package has encountered strong opposition. Communists view it as a lever for drawing Yugoslavia closer to the West. Yugoslavia's unions argue that because of inflation, running at almost 60 percent, the real earnings of workers have dropped one-third in the last four years and are still shrinking.

The money-losing enterprises tend to blame the government for their shortcomings - in particular the vacillating exchange-rate policies which ran up the prices of raw materials and equipment. But the government promises that will change under its new stabilization plan. The plan has given the National Bank new powers over investment, price formation, and related economic matters.

To date, however, inflation has been slowed only marginally. And the unions also foresee a continued decline in income. They note that financial hardship previously affected relatively small sections of the population. Now, they say, far more people are going to be caught in the squeeze. In some of Yugoslavia's republics, as many as 60 percent of enterprises could be affected by the new regulations, they say.

Of the nearly 1 million on the unemployment rolls, more than half are women, thus eliminating a family's second wage earner. Eighty percent are below 30 years of age.

Critics have charged the government with creating jobs for a million white-collar workers in the last decade. At a recent economic conference, one critic jeered that the government was ''just making jobs in the administration to keep the unemployed figure down.''

Since the first years of postwar reconstruction, the consumer contrasts in Yugoslavia have rarely seemed so sharp as now. The employed grab at one, or even two, part-time jobs to supplement incomes. Many work a plot of land in the village. Faring best are those in the agricultural sector or the estimated million Yugoslavs whose relatives in Western Europe send them money.

Others do not do so well. At least 1 in 4 urban Yugoslavs has only a bare wage or only a pension. Last year almost two-thirds of 11/4 million pensioners existed on less than 10,000 dinars monthly (about $70).

Predictably, the unions see the workers in the public sector as paying for the stringent economic policy dictated by the IMF. How, they challenged the government, does an ''unmotivated'' worker, whose earnings are insufficient even for elementary needs, find strength, let alone enthusiasm, to respond to demands for higher productivity as the key to economic recovery?

Strikes are neither legalized nor prohibited, and large or prolonged ones are relatively rare. But in recent years short-term walkouts and wildcat stoppages at factories have proliferated almost into a way of life. Workers downing tools recently in a Zagreb telecommunications plant paraphrased lines of a partisan hymn (pledging loyalty to the late President Tito) to make their feelings known.

''Comrade Tito,'' they sang, ''we cannot live like this anymore....'' At the end of the day, a pay demand was met.

Yet the picture is not quite so bleak as at the start of the year. Industrial growth - stagnating last year - rose 4.3 percent in the first five months. Hard-currency exports rose 16 percent and the trade deficit last year was substantially reduced. Moreover, $2 billion of debt interest to Western banks was paid on time this year.

Economists, however, are cautious. Prof. Oskar Kovacs, dean of Belgrade University's economics faculty, says: ''There has been some qualitative improvement. The question is: Can we keep it up? For that, there must be not just less planning, but more efficient planning.''

Consumption has slowed down greatly, and there has been what Joze Korosec, vice-governor of the National Bank, calls ''a drastic tightening of Yugoslav belts.'' But he warns that it has reached ''the point where political problems arise.''

The latter, however, do not yet seem to be more than matters of public irritation and impatience, albeit very sharply expressed. (The exception is Kosovo, where longstanding economic disadvantage has become dangerously mixed with violent nationalism.)

Most Yugoslavs, however, still exhibit much of the old buoyancy. If they criticize the system, it is not to make it responsible for present problems, as the extreme dissidents do. For them, these difficulties stem not from the federal idea itself, but from the too free rein the component republics of Yugoslavia were able to seize for themselves in the years after Tito's passing.

It is there, in the relations among republics, that modification will ultimately have to come. But while the economic crisis lasts, this seems too hot a political potato for open discussion.